|
|
|
Zhumageldy Sakenovich Yelyubayev, Doctor of Law, MCIArb, President of the Kazakhstan Petroleum Lawyers Association (KPLA), Chevron EBU Managing Legal Counsel
Environmental Risks in the Sphere of Subsoil Use: Law and Enforcement[1]
ENVIRONMENTAL RISKS: GENERAL
The issues of ensuring environmental safety[2] are most important in any country of the world, because its level determines the well-being of the state and the society. With respect to the Republic of Kazakhstan, environmental safety is an element of the national security[3], and therefore the state and citizens as well as users of natural resources should have a special attitude to the issues of environmental safety. Such approach is based on the constitutional rules determining the provision that the state’s objective is protecting environment healthy for people’s life. The RoK Constitution stipulates an obligation of the citizens to protect the nature and to take good care of natural resources[4]. These rules of the RoK Constitution and the applicable environmental legislation are the legal basis for implementing the environmental policy in Kazakhstan.
It should be noted that following independence, Kazakhstan would confirm its adherence to the ideas of environmental safety and sustained development of the state and society[5], having signed the final documents of the UN Conference on the environment and development (RIO-92)[6], and having become an active participant of the process «Environment for Europe», having adhered to key international conventions on climate change, desertification control, conservation of biodiversity, and having ratified other international legal acts on the issues of environmental protection. The necessary element of the process ensuring environmental safety in the country is identifying and managing environmental risks. This will be the subject of my following thoughts. I would like to note that the science of risk[7] has formed in the last quarter of the last century, and, undoubtedly, it will be one of the leading sciences in this century. The reason for it is that the world community faces a great number of problems in the sphere of environmental protection[8], caused by a large-scale industrial development, excessive impact of man’s activity upon natural objects, significant degradation of the quality of our natural environment.
The Environmental Code of the Republic of Kazakhstan (hereinafter RoK EC) contains a correct legislative interpretation of the term environmental risk, as “the likelihood of adverse changes of the environment[9] and/or nature objects due to influence of certain factors”. Moreover environmental risk may be caused not only by man’s activity but also by emergence situations of natural character. Therefore it is critical to have an accurate assessment of environmental risk by identifying and analyzing a probability of events which might cause adverse impact on the environment, people’s health, the economy of the entire country, a separate region or an enterprise. Hence it is necessary to know the rules for classifying environmental risks to work out appropriate recommendations on how to minimize or prevent risks.
Risks may be classified under different criteria, e.g. according to the extent of exposure risks may be global and local. Global risks which must be controlled by the state and society shall include such risks as:
Ø Global climate change; Ø Depletion of the ozone layer; Ø Death of populations and losses of biologic diversity; Ø Pollution of atmospheric air; Ø Contamination of nature objects (water bodies, forests, soil within large areas, depletion of top soil etc.); Ø Floods, earthquakes and other natural disasters; Ø Desertification.
Local risks may relate to:
1. The operation of industrial enterprises generating large volumes of environmental emissions[10]; 2. Industrial accidents and disasters; 3. Willful or negligent misconduct of individuals.
Environmental risks may be classified by the extent of perception and impact thereof, e.g.:
Ø Population health risks; Ø Risks for flora and fauna; Ø Risks for subsoil, land, water bodies, forests and other nature objects; Ø Risks for natural resources (e.g. for minerals); Ø Risks that might cause material and financial losses (for the state, individuals and legal entities).
Based on the classification of environmental risks there can be identified entities which activity is the source of environmental hazard, and efforts made to prevent risks or minimize their impact, as well as to protect objects against environmental risk factors. As a rule, the consequence of environmental risks is incurred harm. In this connection, let us consider factors and forms of indication of harm.
Environmental factors and forms of indication of harm:
Ø Degradation, loss of specific properties and qualities of nature objects[11] (objects of nature use); Ø Degradation of conditions of use of natural resources[12] и пользования природными объектами; Ø Loss of natural resources and nature objects, their withdrawal from use; Ø Violation of environmental equilibrium (ecosystem equilibrium);
Ø Environmental disasters with irreversible effects, degradation of biological diversity[13].
Economic factors and forms of indication of harm:
Ø Losses of the users of natural resources in the use of natural resources and nature objects; Ø Withdrawal of the sources of raw materials from economic turnover and their loss; Ø Losses in the system of labor division; Ø Violation of the conditions of economic reproduction.
Social factors and forms of indication of harm:
Ø Dissatisfaction of people (employees) by the standard of living; Ø Migration of population, including workforce; Ø Breakdown; Ø Increase of disability rate, including congenital disability; Ø Increase of morbidity rate; Ø Multiple fatalities массовая гибель людей; Ø Genetic anomalies etc.
Technical and technological factors of indication of harm:
Ø Premature wear of equipment, instrumentation, units; breaks and accidents; Ø Process flow disruptions; Ø Loss of material valuables (equipment, structures, etc); Ø Decrease of return of production facilities, their efficiency.
As it is impossible to stop man’s activity and if natural disasters are disregarded though sometimes they are the result of man’s activity, environmental risks can be divided by regulatory levels. Such classification helps timely identification and assessment of risks, and hence minimizes harm caused by any environmental disasters. First of all, the classification of environmental risks by regulatory levels should be the focus of the governmental environmental authorities, e.g. the RoK Ministry of Environmental Protection, its territorial subdivisions, non-government environmental institutions carrying out environmental researches.
The following environmental risks can be identified based on this criterion[14]:
Ø Acceptable environmental risk, when the level of risk is feasible from environmental, social and other perspectives, in the specific location (region) and at the specific time. A necessity to develop a concept of acceptable (permissible) environmental risk is determined by the impossibility to provide conditions for absolutely safe activity and technological process. Acceptable risk combines technical, economic, financial, social and political aspects and is a certain compromise between the level of environmental safety and opportunities to achieve it. Ø Maximally permissible environmental risk is a maximal level of acceptable environmental risk. It is determined by the whole scope of adverse environmental aspects and should not be exceeded regardless of political, economic, social, financial interests. Ø Neglected environmental risk is a minimal level of acceptable environmental risk when it is at the level of background or maximally acceptable environmental risk. In its turn, background risk is a risk determined by the existing natural effects and social environment.
Thus, proper understanding of the term “environmental risk”, an ability to correctly identify and classify risks, and to assess consequences, will necessarily provide for environmental safety in the country, effective economic activities of all parties to economic relations, ensuring sustainable development of the state and the society. However, environmental risks should be managed on the basis of perfect and stable environmental legislation, efficient and uniform law enforcement.
SUBSOIL USE AND ENVIRONMENTAL RISKS
The sphere of subsoil use is one of the branches of economy where there exists a high level of environmental risks, specifically during the development of hydrocarbon fields in the shelf of the Caspian Sea. Special environmental requirements apply to subsoil users, as practically all subsoil use operations[15] constitute environmentally hazardous economic activity.
As for companies/investors who currently intend to enter Kazakhstan with the purpose of subsoil development by obtaining subsoil use rights from the state or acquiring a participatory interest from another subsoil user, first of all they should conduct Environmental Due Diligence to minimize costs relating to environmental payments - obligatory and so-called “punitive”. The purpose of Environmental Due Diligence is to identify: obligatory environmental requirements to specific subsoil use operations; environmental violations by the former subsoil users; volume of generated environmental emissions; amount of payments for the use of natural resources; the environmental “status” of the region/area, where subsoil use operations are planned to be carried out. It is worth giving a Russian-based example here.
Thus, e.g. a couple years ago the Russian ecologists and the World Wildlife Fund (WWF) strongly opposed the plans of British Petroleum and Rosneft to extract oil in the Karsk Sea, because in their perspectives such activity of oil companies threats the specially protected natural areas[16] of the region, in particular the Russian Arctic National Park. The Russian competent authority of environmental issues issued to these companies licenses regardless the specific status of this region. Such situation arose because the above oil companies had not carried out Environmental Due Diligence.
A similar situation took place on the Kashagan Field where participating companies which entered into a contract for production oil from this field, did not take into account a number of environmental conditions which are to be complied with and which cause increase of financial costs.
Each year environmental concerns and risks become more challenging both to the society in general and to subsoil users who are the objects of environmental control by the governmental authorities. The parties of these relations can be divided into two main groups. The first group includes different governmental authorities at the republic and local levels. The second group includes subsoil users and contractors/subcontractors. All entities included into the first and second groups directly relate to environmental risks. Moreover the entities of the first group to a greater extent act as regulating, permitting and restricting authorities, while the entities of the second group - as potential sources of environmental danger and threat. Nevertheless, for both groups rational management of environmental risks they face in their activity is critical.
If environmental risk is considered as loss expectation, then it can be defined at least by six important constituents:
Ø A fact of emissions of hazardous substances into the environment or unscheduled depletion of natural resources; Ø Volume of hazardous substances discharged into the environment; Ø Type of pollutant; Ø Duration of contamination exposure; Ø Time of the year; Ø Extent of environmental pollutant hazard.
Having identified environmental risks, a subsoil user shall first of all undertake certain activities subject to:
Ø Accurate forecast of environmental consequences of the scheduled subsoil use operations and other economic activities; Ø Design and implementation of environmentally friendly and resource-saving technologies; Ø Operational monitoring of types of activities; Ø Maintaining accurate account of emissions; Ø Timely repair of the process equipment etc.
Understanding by a subsoil user that risk is a measure of danger is an important step towards solution of the issues of management of situations where potential factors of adverse impact on population and environment exist. Modeling of possible environmental situations and associated risks is an important method of getting information. Any subsoil user is a very complex structure entity with multiple properties. Thus, e.g. an oil company has such properties as ability to gain profit, release products, create jobs and pay wages, implement social programs, make tax and other obligatory payments and, unfortunately, pollute the environment. However, environmental authorities, when modeling a subsoil user’s activities, are focused on the last property of those listed, simplifying the object and treating it as a source of adverse environmental effects and as a “money sack” to replenish the state budget. Such simplified understanding of the activities of companies developing subsoil often is the cause for conflicts with subsoil users, the solution to which are currently based in the wrong law enforcement practice, excluding such important principles of legal relations as legal order, justice, objectivity, presumption of innocence of a subsoil user.
The existing situation in the sphere of environmental relations in this sector of economy can be resolved only by reforming the environmental legislation, excluding bureaucratic procedures for obtaining different environmental permits, reduction of corruptogenicity of these relations.
LAW AND ENVIRONMENTAL RISKS
The Republic of Kazakhstan has a systematic codified environmental legislation which, given its somewhat imperfection, is capable of ensuring environmental safety in the country and development of production in all spheres of economy. Legal regulation of environmental relations allows the parties to these relations timely identify environmental risks and manage them to prevent adverse environmental effect.
Thus, e.g. the RoK EC contains rules establishing general principles of state regulation in the sphere of environmental protection and use of natural resources. The environmental legislation stipulates a system of public control over subsoil users’ operations and provides access of the population to environmental information.
Such legal institutes as: licensing activities in the sphere of environmental protection; environmental regulation; technical regulation of use of natural resources; environmental impact assessment; environmental due diligence; environmental audit; public environmental control, availability of state cadastres of environmental objects, are capable to fully ensure early identification and assessment of environmental risks for the purpose of minimizing their adverse effect.
The RoK EC contains specific environmental requirements to practically all types of economic activities, including special use of natural resources (emissions of hazardous substances into the environment). There are obligatory tax payments for use of natural resources. Therefore compliance by the users of natural resources with the applicable environmental requirement, existence of the stable model of production and consumption,[17] effectiveness of the state supervision and public control over economic activity of legal entities and individuals, availability of real workforce and facilities to respond to man-caused and natural emergency situations, to the extent of managing risks and preventing adverse consequences for the environment and nature objects.
However, in the sphere of regulation of environmental relations there exist a great number of issues caused by the absence of simple rules for interaction between governmental authorities and users of natural resources to ensure a stable model of production and consumption, contradictory provisions of the regulatory legal acts, absence of a uniform, objective and equitable law enforcement, including litigation.
It should be noted that a number of existing problems impede the process of identifying and assessing environmental risks, removal of adverse impacts without substantial financial costs, formation of clear and equitable mutual relations between the users of natural resources and governmental authorities. These problems are as follows:
Ø “threefold” liability imposed on a subsoil user for one violation of environmental requirements; Ø Absence of uniform terminology in environmental, tax and administrative legislation, e.g. absence of clear legislative differentiation of the terms “limits” and “standards”; Ø Absence of systematized methods of calculation of forming hazardous substances, technical specifications, sanitary standards and rules, environmental standards and other necessary technical documents; Ø Over administering of the process of issuance of Environmental Permits, absence of flexible rules in this process; Ø Imperfect rules for suspension of Environmental Permits; Ø Excessively high role of non-qualified, practically “street” public in adopting decisions on key environmental issues; Ø Absence of the rules for recognition of compelled environmental emissions in emergency situations as grounded; Ø Absence of equitable rules for calculating environmental damages; Ø Absence of economic mechanisms to stimulate the activities of the users of natural resources; Ø Absence of a clear system of control and supervision over the activities of the users of natural resources, taking into account market conditions and specifics of the activities of natural resources.
Therefore regardless of all progressive ideas contained in the applicable environmental legislation, its enforcement revealed certain deficiencies and contradictions. The existing system of regulation of the issues of environmental protection is justly criticized by specialists and foreign observers, who note that the aim of the law of Kazakhstan and its enforcement is to punish the users of natural resources, and not to reclaim and conserve the environment. In fact, certain rules of the applicable environmental legislation do not perform useful public objectives, create unreasonably high administrative barriers entrepreneurship and have a high corruptionogenic potential.
Given the above, the existence of clear, equitable and rational system of the environmental legislation is an important step in the implementation of the state environmental policy based on the Constitution. It is the effective state regulation that must ensure allocating funds to remediation and improvement of the environment in the country.
LAW ENFORCEMENT AND ENVIRONMENTAL RISKS
It is not a secret that proper, i.e. valid and equitable, law enforcement, including litigation, is an important source for identifying and assessing environmental risks. Unfortunately, currently in the Republic of Kazakhstan the situation is so that law enforcement practice in general “provides” for illegal exaction of money from major users of natural resources, for alleged violation of environmental requirements or terms of Environmental Permits. Such survey of law enforcement practice is another big topic, however it is worth noting key problems which make the identification and assessment of environmental risks complicated. In particular, there are not infrequent cases when users of natural resources are charged with a liability for violating emission rates specified in the draft emission standards, though there was no violation of emission limits established in the legally significant document - the Environmental Permit. It is known that the document confirming the right of a user of natural resources to make emissions and establishing approved volumes of emissions is Environmental Permit but not the draft emission standards.[18]
The issue of emissions as the normal operational risk has not been resolved. Thus e.g. the legislation does not provide a legal basis for obtaining Environmental permit for emissions caused by the emergency technical malfunctions (deviation) to the extent of normal operational risk without any fault of the user of natural resources, hence the enterprise becomes a regular environmental offender, though such case is the result of extreme necessity. However the applicable legislation refers all above cases to environmental offences subject to liability of the users of natural resources.
There exists unreasonably high liability of the users of natural resources for pollution resulting from excessive and unauthorized emissions under administrative, tax and environmental legislation. In fact, a subsoil user is charged with threefold liability for excessive and unauthorized emissions, namely: under tax legislation (10-fold rates of payment for emissions); under legislation on administrative offences (1000% of the rate of payment for emissions); under environmental legislation (recover of damages with the application, as a rule, of the indirect method with the increasing coefficient 10).
Charging with liability for incurring environmental damage due to invalid pollution without proving the existence of such damage is the violation of civil principles of bringing a charge against a person for incurring harm. However, pursuant to the provision contained in the RoK EC, damage is defined as means “environmental pollution or extraction of natural resources in excess of the established limits, which causes or may cause degradation and depletion of natural resources or death of living organisms”.[19] Given this legislative provision, it is clear that assessment of the amount of damage should be based on material not elements, i.e. when charging with liability for incurring such damage there should be proven both the fact of offence (environmental emission causing pollution) and the fact of hazardous consequences (in the form degradation and depletion of natural resources or death of living organisms).
However litigation based on the administrative practice of governmental authorities for environmental protection evidences that currently these requirements are not observed, and courts exact form the users of natural resources so-called “environmental damage” in multimillion amounts without proving the fact of such offence. Thus, the governmental authorities and courts do not set the objective to ensure recovery of in-kind environmental damages, and initiate claims seeking exaction of money from the users of natural resources to the state budget using the indirect method. Hence the dominating monetary form of recovery does not provide for fulfilling the task of environmental reclamation. Payments made by the users of natural resources become the state budget item, but he condition of the environment does not improve.
It should be noted that the system of issuance of Environmental Permits is not efficient and flexible enough. The applicable rules for administering this process do not allow the users of natural resources to promptly develop production facilities and implement new technologies. The total time of designing draft emission standards, state environmental expert review, public hearings (in individual cases) and issuance of Environmental Permits is up to 12-16 months. Evidently, such long terms place the enterprises in a difficult situation.
The practice of environmental legislation enforcement is not limited to the above issues and concerns, there exits other disputable issues, e.g. disputable issues of identification of a period of time for which the environmental damage is assessed and recovered, disputable issues of the regime of wastes to be subsequently processed and used in production or commercial activities of the users of natural resources etc.
CONCLUSION AND RECOMMENDATIONS
In conclusion it should be noted that the process of identification, analysis and assessment of environmental risks to a greater extent depends upon the existing system of environmental regulation, monitoring and supervision. As stated above, the applicable environmental legislation contains certain environmental requirements to the types of economic activity, including subsoil use, and also contains rules for use of natural resources, specifically for generating emissions of hazardous substances into the environment. However the above issues of imperfect environmental legislation and absence of uniform law enforcement require finding new approaches to identification and assessment of environmental risks. I think that instead of inventing own Kazakhstani “bicycle” we need to use positive foreign experience in revealing, identifying, assessing and managing environmental risks. A good example here can be British Standard 7750: Environmental Management Systems (BS 7750), effective since 1992, which became the basis for designing a similar system of European standards (EMAS). Pursuant to this document, the basis for identification and assessment of environmental risks is establishing and continuous updating the information database, including: Environmental Effects Register; Environmental Risk Source Register; Environmental Risk Hazard Identification; Environmental Risk Rank Identification.
Information compiled regarding sources of environmental risks, plans for reduction or complete elimination thereof is systematized in the Geographic Information System as a database for a model allowing objective assessing real environmental hazard and a possibility to manage it. In addition, environmental risk index can be defined as integral risk per a certain period of time assessed with regard to its reduction, increase and management. Based on its values, conclusion is made on the environmental situation in the region (at the enterprise) and possible ways of its development. It is known that management decisions can be different, but in any case they should be based on the reliable information database, and should not be focused only on “punishing” a user of natural resources without the objective of improvement of the environmental situation.
Of course, it is one of the proposals. Options for solution of these issues to ensure environmental safety in the country may be different, but they should be objective, equitable, based on the law and not only on the subjective opinion of a governmental official concerned with the state budget deficit.
[1] © All copyrights to this work have been reserved by Zh.S. Yelyubayev. [2] Environmental Safety means the security of vital interests and rights of an individual, society and the state against arising of man’s and nature’s impacts on the environment (clause 91 of Article 1 of the RoK Environmental Code dated January 9, 2007 No. 212-III). [3] National Security of the Republic of Kazakhstan means a state of protection of national interests of the Republic of Kazakhstan from actual and potential threats, ensuring dynamic development of an individual and citizen, society and the state (clause 3 of Article 1 of the RoK Law “On National Security of the Republic of Kazakhstan” dated January 6, 2012 No. 527-IV). [4] See Articles 31 and 38 of the Constitution of the Republic of Kazakhstan, adopted at the National Referendum on August 30, 1995. [5] Sustainable Development is development of the society that meets the needs of the present without compromising the ability of future generations to meet their own needs; it is manageable balanced development of the society without destruction of its natural basis, ensuring continuous progress of the human civilization. The term “sustainable development” was introduced to the public by the World Commission on Environment and Development (Brundtland Commission, UNO, 1987). [6] See “Declaration on the Environment and Development, Rio-de-Janeiro, June 14, 1992. [7] Risk is a combination of probability and consequence of an event (http://ru.wikipedia.org, March 30, 2013). [8] Environmental Protection means a system of governmental and social efforts to preserve and restore the environment; to prevent adverse impact, and to mitigate consequences, of economic and other activities on the environment (Clause 46 of Article 1 of RoK EC dated January 9, 2007 No. 212-III). [9] Environment means all natural and artificial objects, including air, ozone layer of the Earth, surface water and groundwater, land, subsoil, flora and fauna, the climate, and the interaction there between (Clause 41 of Article of RoK EC dated 9, 2007 No. 212-III). [10] Environmental Emissions means emission of pollutants, disposal of industrial and domestic wastes in the environment, hazardous physical impact, open disposal and storage of sulfur in the (Clause 43 of Article 1 of RoK EC dated January 9, 2007 No. 212-III). [11] Nature Objects mean nature objects having their boundaries, volume and the mode of being (Clause 72 of Article 1 of RoK EC dated January 9, 2007 No, 212-III). [12] Natural Resources mean nature objects having consumption value: land, subsoil, water, flora and fauna (Clause 73 of Article 1 of RoK EC dated January 9, 2007 No. 212-III). [13] Biological Diversity means the variability among animals and plants within and between species and of ecosystems (Clause 46 of Article 1 of RoK EC dated January 9, 2007 No. 212-III). [14] See. http://insurance-rf.narod.ru, Classification of ecological risks. 30.03.2013. [15] Subsoil use operations - activities related to the state geological studies, exploration and/or mining, including exploration and mining of underground waters, therapeutic mud, mineral prospecting for sewage, as well as the construction and/or the operation of underground facilities not related to exploration and/or) production (Clause 18 of Article 1 of the RoK Law “On Subsoil and Subsoil Use” dated June 24, 2010 No. 291-IV). [16] Specially Protected Natural Area - plots of lands, water objects and air space over them with natural complexes and objects of the state natural and reserved fund for which the regime of special protection is established (Clause 3 of Article 1 of the RoK Law “On Specially Protected Natural Territories” dated July 7, 2006 No. 175-III). [17] Sustainable production and consumption model means a socio-economic model, which is characterised by an increase in production with reduction of consumption of non-renewable natural resources, restoration of renewable resources, and decrease in man-made environmental pollution (Clause 61 of the RoK Environmental Code dated January 9, 2007 No. 212-III). [18] See Clause 2 of Article 12 and Clause 1 of Article 69 of RoK EC. [19] See sub-clause 42 of Clause 1 of Article 1 of RoK EC.
Доступ к документам и консультации
от ведущих специалистов |